LO1 Explain the different types of organizations including their size and scope.

An organization is a group of people, such as a foundation or an academy, who work

together to achieve multiple goals and are connected to the outside world. There are
various types of organizations; some are formed to generate revenue for their owners,
while others, known as non-profits, are formed to serve the public good.

01. Types of Organizations

 Organizations can be classified into different types based on their structure, ownership
and purpose. Here are some common types.
It,
i. Non-Profit Organization
 Operated for charitable, educational or community service purposes.
 Profits, if any, are reinvested in the organization's mission.

ii. Government Organization

 Government owned and operated.
 Public services are provided and funded by taxpayers.

02. Size of Organization

 Organizations vary in size, which can influence their structure and performance.
Its,
i. Small and Medium Enterprises
 generally have less number of employees and lower revenue compared to large
enterprises.

ii. Large enterprises

 have significant number of employees and high revenue.
 Often has a more complex organizational structure.

03. SCOPE OF ORGANIZATIONS

  The scope of an organization is the range of products, services or activities in which it
engages.
Its,
i. Regional Organizations
 Operates in a specific geographical area.

ii. National Organizations

 Operate at national level serving customers or clients across the country.

iii. Multinational Corporations

 With global operations
 Have presence in several countries.

iv. Global organizations

 Operate worldwide and have significant international presence.

P1: Explain the different types and purposes of organizations; Public, private and voluntary
sectors and legal structures.

1. Public sector
Table 01:
Definition The public sector consists of organizations owned and operated by the
government. These organizations are funded by taxpayers and are
accountable to the government and the public.

Purpose The primary purpose of public sector organizations is to provide

essential services to the public such as education, health care,
infrastructure and public safety. Examples include government agencies,
government schools and government hospitals.
 2. Private sector
Table 02:
Definition The private sector includes businesses and organizations owned and
operated by private individuals or groups. These institutions are run for
profit and are not controlled by the government.

Purpose The main objective of private sector organizations is to make profit. The
sector includes a wide range of businesses from small entrepreneurs to
large corporations across various industries such as manufacturing,
services and technology.

EXAMPLE

i. Sole Proprietorship
 Owned and operated by a single person.
 Simple structure
 owner has full control and responsibility.

Advantages of sole trading Disadvantages of sole trading

• You're the company's • Because there is no legal

bogeyman. distinction between
• You are entitled to private and business
all earnings. assets, you have infinite
• creating and running debt obligation.
your company • It's difficult to take
• You have vacations.
complete privacy. • Complete accountability
for everyday business
choices.

ii. Partnership
 Owned by two or more persons who share responsibilities and profits.
 Advantages of a business Disadvantages of a business
partnership partnership
• There are fewer • A business does not
legal duties and
have its own legal
the process is less
department
formal
• Profits must be
• Gaining access to distributed
information, skills, equally.
expertise, and • Restrictions on corporate
contacts. expansion.
• Profits are easily
accessible

iii. Corporation
 A legal entity separated from its owners (shareholders).
 Limited liability for shareholders with ownership represented by shares.

Advantages of cooperative Disadvantage of cooperatives

• Lowering Costs • There is less operational control.

• Expanded Marketing Reach • Fixed Costs

iv. Private Limited Company.

• Restricts share ownership.
• caps the number of shareholders at 50
• prohibits stockholders from selling their stock publicly.
 Advantages of Private Limited Disadvantages of a Private Limited
Company Company

• Simple and free share • One of the key

transfer disadvantages of a
• Continuity of existence private limited company
• Independent Legal is that its articles limit
Entity the ability of shares to be
transferred.

• Shares are not traded on

the stock exchange.

v. Public Limited Corporation (PLC).

• Separate legal entity selling shares to public.

• Compulsory and public disclosure of financial facts.
• Adherence to corporate law standards.

Public limited company advantages Public limited company disadvantages

• Public equity shares are used to • There are numerous constitutional

raise funds. obligations.
• Increasing the number of • There is a need for
shareholders and distributing risk. further clarification.
• Shares are transferable. • The actual financial stakes are
bigger.

vi. Franchise.
 A method of selling products or services where a franchisor creates the company's trademark
and business structure.
 A franchisee pays a premium and an introductory fee for the right to operate under the
franchisor's branding.
 The term "franchise" is commonly used to refer to the company the franchisee manages.
 Franchising describes the process of creating and selling a trademark or franchise plan.
Advantages of Franchise Disadvantages of Franchise

• Expansion can be facilitated by • Franchise recruiting might be

franchisors providing labour and slower and less successful than
increasing earnings. staff recruitment.

• The franchisees may have a • The initial investment (time and

greater opportunity to grow money) required may be
the business and profit than the significant - it may be necessary
employees. to test a pilot project.

• Good sites will pay out a lot of Selecting the incorrect franchisee
royalties. will ruin the credibility of the entire
business.
 3. Voluntary Sector (Non-Profit Organizations)
Table 03:
Definition The voluntary sector, also known as the non-profit sector or the third
sector, consists of organizations that are not focused on making a profit.
Instead, they aim to fulfill a social or environmental mission.

Purpose Voluntary sector organizations work for the welfare of the society and
solve various social problems. They depend on donations, grants and
volunteers. Examples include charities, non-governmental organizations
(NGOs) and community-based organizations.

Advantages Disadvantages
• Financial support available for • Financial support not guaranteed
voluntary clubs through national • Can be socially exclusive in some
government, business, local sports
sponsorship. • Unplanned and uncontrolled, so

• Lot of activities opportunities cannot be demand.

• Easy to create opportunities

• Not usually economic
disadvantage for people as u
choose to get involved support is
available

4. Legal Structures
Table 04:
Sole Proprietorship A business owned and operated by a single person. Owner has
unlimited liability.
Partnership A business structure in which two or more persons manage and operate
a business in accordance with the terms and objectives set out in a
partnership deed.
Limited Liability A legal structure that provides limited liability to its owners and
Company (LLC) combines elements of partnerships and corporations.

Page 7 of 23
 Corporation A legal entity separated from its owners, offering limited liability to
shareholders. It can issue shares and is subject to complex regulations.

P2: Explain the size and scope of a range of different types of organizations.

1. Micro Enterprises
Table 05:
Size Generally, micro enterprises have a very small number of employees,
often less than 10.

Scope Microenterprises typically operate at a local level and may focus on

niche markets. They may include small shops, local cafes or freelancers.

2. Small and Medium Enterprises (SMEs)

Table 06:
Size
SMEs vary in size, but generally have more employees than micro-
enterprises. The exact criteria for what qualified as an SME may vary by
country.

Scope SMEs can operate at regional or national level. They may serve broader
markets and have more diverse product or service offerings.

3. Large companies
Table 07:
Size
Large companies have a significant number of employees, often in the
thousands or even more.

Scope Large companies operate at a national or international level. They have

different business units, a wide range of products or services and may be

Page 8 of 23
 involved in different industries.

4. Multinational Corporations (MNCs)

Table 08:
Size
Similar to large firms, MNCs have a significant number of employees
but are characterized by their presence in several countries.

Scope MNCs have a global scope with operations, subsidiaries or branches in

different countries. They often engage in international trade and have a
significant impact on the global economy.

5. Non-Profit Organizations
Table 09:
Size
Nonprofits can vary widely in size, from small local charities to large
international NGOs.

Scope The scope of nonprofit organizations depends on their mission. Local

charities may focus on specific community needs, while international
NGOs may address global issues such as poverty, health or human
rights.

6. Government Offices
Table 10:
Size
Government agencies can vary in size based on their functions and

Page 9 of 23
 responsibilities.

Scope Government agencies operate within the jurisdiction of a specific

government. Their scope includes providing public services, enforcing
regulations and implementing government policies.

M1 Analyze how the structure, size and scope of different organizations link to the business
objectives and product and services offered by the organization

 Relationship between structure and business objectives

1. Hierarchical Structure
Table 11:
Business Objectives Organizations with a hierarchical structure often have clear powers.
Link This structure can support centralized decision-making and may be
suitable for organizations that focus on efficiency and stability in their
operations.
Product/Service Organizations with a hierarchical structure may offer standardized
Link products or services with an emphasis on consistency and reliability.

 A large manufacturing company with a hierarchical structure may have business

objectives centered on streamlining production processes and offering a consistent
product line.

2. Flat Structure
Table 12:
Business Objectives Organizations with a flat structure may emphasize collaboration and
Link quick decision-making, which may be advantageous for responding to
innovation and market changes.
Product/Service Firms with a flat structure can respond quickly to market changes and
Link offer innovative and customized products or services.

 A large corporation with a hierarchical structure may prioritize the efficiency of mass
production, while a startup with a flat structure may prioritize innovation and adaptation.

Page 10 of 23
  A technology startup with a flat structure may prioritize agility in responding to market
trends, leading to the development of innovative and personalized technology solutions.

 The link between size and business objectives

1. Small organizations
Table 13:
Business Objectives Small organizations may prioritize agility and flexibility. Their
Link business objectives may include rapid response to market changes and
personalized customer service.
Product/Service Small organizations may offer specialized and niche products or
Link services that fit the specific needs of their local or target market.

 A small boutique clothing store may have business objectives focused on providing
personalized service and offering unique, locally sourced fashion items.

2. Large Organizations
Table 14:
Business Objectives Large organizations may focus on economies of scale, market
Link dominance and global expansion as key business objectives. Business
objectives may include cost efficiency and market share growth.
Product/Service Larger firms can achieve economies of scale and offer standardized
Link products or services for a wider international market.

 A small software startup may emphasize speed of product development, while a large
multinational company may prioritize cost efficiency in mass production.
 A multinational fast food chain of large corporate size may have business objectives of
global market expansion and cost-efficient production of standardized menu items.
3. Global Focus

Table 15:
Business Objectives Globally focused organizations with market penetration, diversification
Link and ability to leverage different markets in different countries.

Page 11 of 23
 Product/Service Global organizations may offer products or services that are
Link standardized for global appeal or adapted to local preferences.

Example
 A global electronics company may have business objectives that focus on expanding into
emerging markets and offering products tailored to local consumer preferences.

 Relationship between scope and business objectives:

1. Local focus

 Organizations with a local scope can prioritize community engagement and customized
services according to the specific needs of their local market.

2. Global Focus

 Organizations with a global scope can aim for market penetration in different countries,
diversification and the ability to stimulate different markets.
Ex. A local bakery may focus on creating unique products for its community, while a global
technology company may develop standardized products for a broad international market.

 Link between business objectives and products/services offered

1. Innovation Objectives

 Organizations that focus on innovation may offer cutting-edge products or services

that meet emerging market needs.

2. Cost Leadership Objectives

 Organizations that aim for cost leadership may offer standardized, cost-effective
products or services.
Ex. A technology company with an innovation objective may offer the latest equipment, while a
company with a cost leadership objective may provide affordable, mass-produced electronics.

Page 12 of 23
LO2 Demonstrate the interrelationship of the various functions within an organization and
how they link to organizational structure.

 Let's break LO2 into two main parts

 Interrelationship of various functions in an organization

 Link to Organizational Structure

01. Interrelationship of various functions in an organization

 Organizations have different functions or departments that work together to achieve

common goals. These functions are interconnected and interconnected. Here are some
key functions in an organization:

Its,
i. Sales
 Focuses on promoting and selling products or services.
 Works closely with other departments to understand customer needs.
 Works closely with Marketing, Production and Finance to achieve sales goals.

ii. Finance
 Manages the organization's financial resources.
 Collaborates with other functions to allocate budgets and make financial
decisions.

iii. Human Resources (HR)

 Responsible for recruiting, training and managing personnel.
 Works with other departments to ensure staffing needs are aligned with
organizational goals.
Page 13 of 23
 iv. Operations/Production
 Manages the production of goods or services.
 Coordinates with other functions to optimize efficiency and meet demand.

v. Research and Development (R&D)

 Focuses on innovation and product development.
 Collaborates with marketing and production to bring new products to market.

vi. Information Technology (IT)

 Manages technical infrastructure and systems.
 Collaborates with all functions to ensure technical support for corporate
objectives.

02. Link to Organizational Structure

 Organizational structure defines how the various functions are organized and how they
interact. Common organizational structures include

Its,
i. Active structure
 by specific functions (ex. marketing, finance, human resources).
 Promotes efficiency within departments but can create communication
challenges between functions.

ii. Regional structure

 Organized by product, service, or geographic location.
 Each division functions as a separate entity with its functions.

iii. Matrix structure

 Combines elements of both functional and regional structures.
 Employees report to both functional managers and project or product managers.

iv. flat structure

 Multiple layers of management, promoting quick decision making.
 May lead to greater control and increased cooperation.

v. Hierarchical Structure

Page 14 of 23
  Traditional pyramid shaped structure with clear powers.
 Well defined roles but can lead to slow decision making.

P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure.

organizational functions organizational objectives organizational structure

Financial Function
Marketing Function
Human Resource (HR)
Function
Operations/Production
Function
The finance function plays a
critical role in managing
financial resources, budgeting
and ensuring financial
stability. It links directly to
objectives related to
profitability, cost control and
financial sustainability.
The marketing function is
vital for promoting
products/services,
understanding customer
needs and building brand
awareness. It directly
supports objectives related to
market share, customer
satisfaction and revenue
growth.
HR is responsible for
recruiting, training and
managing personnel. It
directly contributes to goals
related to workforce
productivity, employee
satisfaction and skill
development.
Operations focus on efficient
production or delivery of
products/services. Objectives
may include cost reduction,
quality improvement, and on-
In a hierarchical structure,
financial decisions can be
centralized to ensure control,
while in a flat structure,
financial responsibilities can
be distributed to facilitate
quick decision making.
Structure can influence how
marketing strategies are
developed and implemented.
In a flat structure, there can
be greater agility in
responding to market trends.
Organizational structure can
influence HR policies and
practices. In a decentralized
structure, individual
departments can have more
autonomy in managing their
teams.
In a hierarchical structure,
there may be a clear chain of
command for production
processes. In a flat structure,
cross-functional collaboration

Page 15 of 23

Information Technology (IT)
Function
Sales Function:
Research and Development
(R&D) Function
M2 Analys the interrelationships between organizational functions and the impact that can
have upon organizational structure
organizational functions
Financial Function and
Corporate Structure
Marketing Function and
Organizational Structure
time delivery.
IT is critical to support
business processes, data
management and
technological innovation.
Objectives may include
technical efficiency, data
security and digital
transformation.
Sales directly contribute to
revenue generation, customer
acquisition and market
expansion. Objectives may
include sales goals, customer
retention, and market share
growth.
Research and development
focuses on innovation and
product/service development.
Objectives may include new
product launches,
technological advancements,
and market differentiation.
organizational functions
The finance function
collaborates with various
departments to ensure budget
allocation, cost control and
financial stability.
Marketing interacts with
sales, product development
and operations to align
strategies, understand
customer needs and promote
Page 16 of 23
can be emphasized for
efficiency.
Structure can determine how
IT is integrated into different
departments. In a matrix
structure, IT specialists can
work across different projects
and teams.
The sales structure can vary
depending on whether it is
organized by geographic
regions, product lines, or
customer segments.
In an innovative organization,
R&D can have a more
prominent role, influencing
the structure to encourage
creativity and collaboration.
organizational structure
In a centralized structure,
finance may have more
control over budget decisions,
while in a decentralized
structure, individual
departments may have more
autonomy.
A flat structure can facilitate
faster communication and
collaboration between
marketing and other
functions, improving the

Human Resource (HR)
Function and Organizational
Structure
Operational/Production
Function and Organizational
Structure
Information Technology (IT)
Function and Organizational
Structure
Sales Function and
Organizational Structure
Research and Development
(R&D) Function and
Organizational Structure
products/services. agility of responding to
market changes.
HR collaborates with various Structure can influence HR
departments to recruit, train, policies, and in a matrix
and manage personnel, structure, HR plays a role in
supporting the organization's managing cross-functional
workforce needs. teams.
Interacts with operations Structure can influence how
finance, marketing and sales production processes are
to ensure efficient production organized, and a hierarchical
or delivery of structure can emphasize clear
products/services. lines of command in
operations.
IT collaborates with different In a more technologically
functions to support technical advanced organization,
requirements, data information technology can
management and digital impact structure to ensure
innovation. seamless integration across
departments.
Collaborates with Marketing, The sales structure may be
Finance and Operations to organized based on
achieve sales revenue goals, geographic regions, product
acquire customers and expand lines, or customer segments,
market share. which affects how it interacts
with other functions.
R&D collaborates with In an organization focused on
marketing, finance, and innovation, research and
operations to innovate, development may have a
develop new products, and more prominent role,
change the organization in the influencing the structure to
marketplace. encourage creativity and
collaboration.

LO3 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations.

Certainly, understanding the macro environment and its impact on business operations is critical.
Let's break down the positive and negative effects with examples

Page 17 of 23
table 1.
Positive Effects
1. Technological Advancement
 Businesses can benefit from
improvements that increase
efficiency and open up new
markets.
Ex. Widespread use of cloud computing
has allowed businesses to streamline
operations and reduce costs.
2. Economic Growth
 A growing economy can lead to
increased consumer spending
and business expansion.
Ex. During periods of economic growth,
industries such as technology often
experience high demand for products and
services.
3. Social Trends
 Aligning with social trends can
boost brand image and market
share.
Ex. Growing interest in sustainability has
motivated businesses to adopt
environmentally friendly practices,
attracting eco-friendly consumers.
Page 18 of 23
Negative Effects
1. Economic downturn
 Economic recessions can lead to
reduced consumer spending and
business shrinkage.
Ex. The 2008 financial crisis led to
declining consumer confidence and
decline in various industries.
2. Regulatory changes
 Sudden regulatory shifts can
pose challenges and increase
compliance costs.
Ex. Changes in data protection laws
required businesses to invest in
compliance measures.
3. Natural calamities
 Events such as hurricanes or
earthquakes can disrupt supply
chains and operations.
Ex. The 2011 earthquake and tsunami in
Japan affected global supply chains,
particularly the automotive and
electronics industries.
P4 Identify the positive and negative impacts the macro environment has on business
operations, supported by specific examples.
Factors
Economic Factors
Technical Factors
Political and Legal Factors
Social and Cultural Factors
Environmental Factors
Positive impacts
Economic growth can lead to
increased consumer spending,
benefiting businesses. For
example, during periods of
economic prosperity,
industries such as luxury
goods, travel and
entertainment tend to thrive.
Technological advances can
increase efficiency and open
up new business
opportunities. For example,
the rise of e-commerce has
allowed businesses to reach a
wider customer base.
Favorable government
policies and incentives may
benefit certain industries. For
example, subsidies for
renewable energies can
positively affect businesses in
the clean energy sector.
Changing social trends can
create new market
opportunities. For example,
an increased focus on health
and wellness has led to the
growth of the organic food
and fitness industries.
Growing environmental
awareness can increase
demand for sustainable
products and practices. For
example, businesses that
Page 19 of 23
negative impacts
Economic recessions can lead
to reduced consumer
spending and demand. For
example, during a recession,
consumers may cut back on
non-essential purchases,
affecting industries such as
luxury and travel.
Rapid technological changes
may require businesses to
adapt quickly and those
unable to keep pace may face
obsolescence. For example,
traditional brick and mortar
retailers may struggle in the
face of e-commerce growth.
Political instability or adverse
regulation may pose
challenges. For example,
sudden changes in trade
policies or tariffs can disrupt
supply chains and increase
costs for businesses.
Negative publicity due to
social issues can damage a
company's reputation. For
example, companies
associated with unethical
practices or discriminatory
behavior may face boycotts
and reduced consumer
confidence.
Stricter environmental
regulations may increase
costs for some industries. For
example, companies engaged
in heavy manufacturing may
 adopt eco-friendly practices
may attract eco-friendly
customers.
Global Factors Access to global markets can
provide growth opportunities.
For example, businesses that
export goods or services can
benefit from increased
international demand.
face challenges in meeting
emission standards.
Global economic downturns
or geopolitical tensions may
negatively impact businesses
engaged in international
trade. For example, trade
disputes can lead to higher
tariffs and trade barriers.

M3 Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment in an organization.

 PESTLE model is a strategic management tool that helps in analyzing the external macro
environmental factors affecting an organization. Acronym for political, economic, social,
technological, legal and environmental factors.

01. Political Factors

 Examine the political landscape and government influence on the organization.

Consider factors such as government stability, policies and regulations.
Ex. Changes in government policies related to trade agreements can affect international business.
For example, increased tariffs may affect import and export costs.

02. Economic Factors

 Evaluate economic conditions and trends that may affect the organization. Consider
factors such as inflation rates, exchange rates and economic growth.
Ex. A recession can affect consumer spending patterns, which in turn affects the sales and
revenue of businesses.

03. Social Factors

 Analyze social trends, demographics, and cultural influences on the organization.

Consider factors such as demographics, lifestyle changes and consumer attitudes.

Page 20 of 23
Ex. Changing consumer preferences for sustainable products can create opportunities for
businesses that focus on environmentally friendly practices.

04. Technical Factors

 Assess the impact of technological advances on the organization. Consider factors such
as automation, innovation and the pace of technological change.
Ex. Adoption of new technologies such as artificial intelligence can improve operational
efficiency and competitive advantage.

05. Legal Factors

 Examine the legal environment and regulatory framework affecting the organization.
Consider factors such as labor laws, intellectual property protection and industry-
specific regulations.
Ex. Changes in data protection laws (such as GDPR) can affect how organizations handle
customer data and conduct marketing activities.

06. Environmental Factors

 Evaluating the organization's response to environmental sustainability and the impact of

environmental changes on its operations. Consider factors such as climate change,
resource availability and environmental regulations.
Ex. Organizations in the energy sector may face challenges and opportunities related to the
transition to renewable energy sources.

LO4 Determine the internal strengths and weaknesses of specific businesses and explain
their interrelationship with external macro factors.

Internal Analysis (SWOT Analysis)

1. Strengths
 Identify and list the internal strengths of the particular businesses you are analyzing.

Page 21 of 23
  These may include elements such as a strong brand reputation, a skilled workforce,
proprietary technology, efficient processes, or financial stability.

2. Weaknesses:
 Identify and list the internal weaknesses of businesses.

 Examples could be outdated technology, lack of innovation, poor management or

financial constraints.

External analysis (macro factors)

1. Opportunities
 External opportunities that businesses can take advantage of.

 Consider market trends, technological advances, regulatory changes or emerging

customer needs.

2. Threats
 Identify external threats the business may face.

 These may include competition, economic downturns, changing consumer preferences or

regulatory challenges.

Interrelation between internal and external factors

1. Strengths and Opportunities

 Analyze how businesses can use their internal strengths to take advantage of external
opportunities.

Ex. a strong research and development department can help a business take advantage of
emerging technology.

2. Strengths and Threats

 Consider how internal strengths can mitigate external threats.

Ex. a strong brand reputation can help a business withstand negative publicity.
Page 22 of 23
3. Weaknesses and Opportunities
 Examine how addressing internal weaknesses can help businesses seize external
opportunities.

 Improving operational efficiency can position a business to take advantage of a growing

market.

4. Weaknesses and Threats

 Assess how internal vulnerabilities exacerbate external threats.

Ex. financial instability associated with economic downturns can be a significant risk.

P5 Conduct internal and external analysis of specific organizations in order to identify

strengths and weaknesses.

Page 23 of 23